* Gold has gained 20 pct this year, Fed June hike unlikely
* Global gold demand posts strongest Q1 on record - WGC
* Holdings at major gold-backed ETF highest since 2013
* Coming up: U.S. weekly jobless claims at 1230 GMT (Adds record Q1 gold demand, India outlook, updates prices)
By Manolo Serapio Jr
MANILA, May 12 (Reuters) - Gold retreated on Thursday after rising the most since late April the session before as the dollar recovered some lost ground.
But expectations that the U.S. Federal Reserve is unlikely to raise interest rates at its next meeting in June should help gold find strong support at $1,250 an ounce, said OCBC Bank analyst Barnabas Gan.
"The reason for the recent glitter in gold is the downplay of the probability of a Fed rate hike in June. It should give gold a lift for the rest of the quarter," said Gan.
But spot gold XAU= came off slightly on Thursday as the dollar bounced back versus a basket of major currencies .DXY , making dollar-priced assets such as gold more costly for holders of other currencies.
Spot gold was down 0.5 percent at $1,271.40 an ounce by 0641 GMT, after climbing off two-week lows overnight. Wednesday's nearly 1 percent gain was bullion's strongest since April 29.
U.S. gold for June delivery GCcv1 dropped 0.2 percent to $1,273.20 an ounce.
Gold has risen nearly 20 percent this year, benefiting from expectations that the Fed is unlikely to raise interest rates anytime soon.
Those expectations strengthened after data last week showed that the U.S. economy added the fewest jobs in seven months in April.
"If the global growth scenario is not as bullish as what we think it would be and more importantly if the Fed does not move this year, gold should rise to $1,400," said Gan.
Underlining optimism towards the metal, holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, stood at 27.07 million ounces on Wednesday, the highest since December 2013. HLDSPDRGT=XAU
Surging inflows into gold-backed exchange-traded funds drove global gold demand to its highest first-quarter total on record this year at 1,290 tonnes, the World Gold Council said. in India, the world's second-biggest gold consumer, could rise as much as 10 percent in 2016 on good monsoon rainfall, WGC said. will be eyeing the weekly U.S. jobless claims tonight for trading cues later in the global session, with MKS Group trader Jason Cerisola seeing support for gold at $1,260 and resistance at $1,280.
Spot silver XAG= slipped 0.6 percent to $17.29 an ounce, platinum XPT= dropped 0.2 percent to $1,061.15 and palladium XPD= gained 0.8 percent to $609.08.